By Deep Kaushik Vakil - Gold reversed course to gain, heading into the U.S. session, on Monday, as traders assessed risks from the collapse of the First Republic Bank in the run-up to the Federal Reserve's rate hike decision this week.

Spot gold was up 0.7% at $2,003.99 per ounce by 9:00 a.m. EDT (1300 GMT), after hitting a session low of $1,976.89. U.S. gold futures added 0.7% to $2,013.70.

JPMorgan Chase & Co said it would buy most of First Republic Bank's assets after regulators seized the troubled lender at the weekend, marking the third failure of a major U.S. bank in two months.

That "falls into the camp of those looking to do some safe-haven buying in case there's another shoe to drop in the banking turmoil", said Jim Wyckoff, senior analyst at Kitco Metals, adding that the path of least resistance for gold remains sideways to higher.

Gold prices gained more than 1% in April, while the dollar index lost 0.8%, as concerns over more collapses among U.S. banks enhanced bullion's safe-haven appeal.

The Federal Open Market Committee (FOMC) will meet on May 2-3, and markets largely expect a 25-basis-point interest rate hike.

Investors will also focus on Fed Chair Jerome Powell's press conference to assess if the commentary pushes back market expectations of rate cuts before the year-end amid the recent banking turmoil and threats of an imminent recession.

While gold is known as an inflation hedge, rising rates tend to lower demand for zero-yielding bullion.

Manufacturing data from the Institute for Supply Management and S&P Global for April and the Commerce Department's construction spending for March due later in the day will also be scanned for more economic cues.

Spot silver rose 3.3% to $25.86 per ounce, platinum gained 0.91% to $1,083.73, while palladium was up 0.9% at $1,514.97.

(Reporting by Deep Vakil in Bengaluru; Editing by Shilpi Majumdar)